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Tuesday, November 02, 2010

Election Day reflections

I did my civic duty this morning (despite the voting paradox), going to P.S. 41 in the West Village this morning to cast an all-Democratic ballot.

It's a good thing that the Republicans have made it unnecessary for me to consider them (as I might have been willing to do, here and there, if they had not gone stark raving mad in 1994 and then just grown continually worse). The reason it's a good thing is that the new voting method in New York State makes it very hard on people who (speaking just in general terms, of course) occasionally need reading glasses but have forgotten to bring them. You need to pore over an awful lot of small print in less than ideal lighting, so it's helpful to have a prior (Column A) to make things easier.

I well remember voting at the same place in 2008. Partly because I got there closer to prime time (for pre-workday voters) but more because of the higher turnout levels, in 2008 I had to wait on a very long line that extended around the block. There were a lot of excited and, yes, angry voters on that 2008 line, sharing the sentiment that today we were going to crushingly reject a party (after 8 long years under its boot) whose leaders' honesty, good faith, competence, and even true patriotism (as opposed to partisanship) we did not respect.

Obviously the feelings are very different this year, though in the absence of a voter line I didn't end up getting a sense of the general (at least West Village) pulse. But speaking for myself, I don't plan to follow the election returns tonight. Tomorrow morning is plenty soon enough to digest the news of what's happened.

How could it have been different? Applying 20-20 hindsight, as the things on the list below vary on how obvious up front they were, it seems clear now that Obama should have done the following:

1) Demand a much bigger stimulus package with more emphasis on stuff that is actually effective, rather than relatively non-stimulative tax cuts designed to get Republican votes. Settle for the best available package (which might not have been much better than what was actually enacted), but make it very clear up front that it was not big enough, and that those opposing a bigger package were to blame if the economy didn't revive faster.

2) On rescuing the financial system, be much more vigorous in ensuring that the insiders who created the problem were not being rewarded. Wipe out the old equity when rescuing firms. Let the Republicans screech about socialism, but give that line the lie by spinning things back into the private sector afterwards. It was vital not to give the public the sense (which turned out to be true) that fat cat insiders were gaming the system and being rewarded for "heads I win, tails you lose" bets with the world economy.

3) Replace Bernanke with a reputable Democratic economist who actually cared about unemployment and was willing to be vigorous in fighting it. Fill all the vacant Fed seats with like-minded people. Unapologetically use recess appointments to the extent necessary. This one, I must admit, I got wrong up front, too. I knew that Bernanke had an excellent academic reputation, and believed (what with his writing about Japan's mistakes) that he would actually try a lot harder and sooner to address the ongoing slump. Evidently his ideological and/or partisan commitments mattered more than I had thought they would. Under current circumstances, his evident concern about inflation reminds me of my cat Ursula, whose job it is to keep crocodiles out of our house, and who has been doing an excellent job (none spotted yet).

4) Recognizing that there would be no Republican support whatsoever for healthcare reform under any circumstances, get something through with Democrats alone by June 2009. On this one, I gather Democratic Senators counseled the Administration to no avail that it was being naive.

Political scientists disagree about the extent to which political tactics make a difference if economic fundamentals are bad. But some of these items might have caused the economic fundamentals to be better than they are, and the rest could have helped make the case that bad stuff was not his fault but rather the product of Republican obstructionism. Too late for any of that now, however.

2 comments:

I think Obama is an interesting example of the importance of explaining things in terms that people can understand. It is not necessarily illogical to say that a one million stimulus didn't work, so let's do two or three million. But it's very hard to convince an ordinary person of this, any more than that individual deficits are bad but Government ones are good. Machiavelli, or Paul Samuelson, would not have made these errors.

About Me

I am the Wayne Perry Professor of Taxation at New York University Law School. My research mainly emphasizes tax policy, government transfers, budgetary measures, social insurance, and entitlements reform. My most recent books are (1) Decoding the U.S. Corporate Tax (2009) and (2) Taxes, Spending, and the U.S. Government's March Toward Bankruptcy (2006). My other books include Do Deficits Matter? (1997), When Rules Change: An Economic and Political Analysis of Transition Relief and Retroactivity (2000), Making Sense of Social Security Reform (2000), Who Should Pay for Medicare? (2004), Taxes, Spending, and the U.S. Government's March Towards Bankruptcy (2006), Decoding the U.S. Corporate Tax (2009), and Fixing the U.S. International Tax Rules (forthcoming). I am also the author of a novel, Getting It. I am married with two children (boys aged 16 and 19) as well as four (!) cats. For my wife Pat's quilting blog, see Patwig’s Blog.